Wednesday, May 20, 2009

Fortuna Reports Record Revenue of US$ 8.98 Million and a Production Cash Cost of US$ 0.10 /oz of Silver in Q1 2009. FVI.v, CDNX, SLV, HUI, XAU, SSRI

Technically we have a very positive picture here: MA50 at 1.02CAD must be challenged first and then 1.25 - 1.5 at resistance is open with gap weekly to 2.0CAD. All momentum indicators are positive.
We are monitoring situation with Mexico: who will consolidate the game there? Pan American Silver PAA.to has moved into J/V with Orko Silver OK.v. Will Fortuna Silver FVI.v become a prey or continue to be a predator? Avino Silver and Gold Mines ASM.v is doing nothing now and it is not an option in this market, Esperanza Silver EPZ.v has interesting property in Mexico as well.
Pay attention, please, to cash cost of production in Q1 $0.10 /oz, that is why Silver above 14 $/oz is beating swine flu scare even in Mexico. If our long term analyses about the Gold and Silver next move is correct, it could be the last chance to accumulate cheap shares in Mexican Silver plays this Summer.
May 19, 2009
May 19, 2009: Fortuna Silver Mines Inc. (TSX.V: FVI / Lima Exchange: FVI) - is pleased to announce that it has filed its financial statements and MD&A for the three months ended March 31, 2009. The full documents are available on SEDAR and have also been posted on the Company's website at http://www.fortunasilver.com/.Change in Reporting CurrencyEffective January 1, 2009, the Company changed its reporting currency to the US dollar. The change in reporting currency is to better reflect the Company's business activities and to improve investors' ability to compare the Company's financial results with other publicly traded businesses in the mining industry.First Quarter 2009 highlights
Historic record sales of $ 8.98 million compared to $ 6.81 million Q1 2008
Operating cash flow before changes in non-cash working capital items of $ 4.23 million compared to $ 2.61 million Q1 2008
Net loss of $ 1.06 million compared to net loss of $ 0.64 million in Q1 2008
Cash position and working capital as at March 31, 2009 were $ 27.02 million and $ 32.59 million respectivelyJorge Ganoza, President, CEO and Director, commented, "The Fortuna team has delivered another quarter of continued achievement with record sales and record silver production. Silver now represents 49% of revenue at a cash cost per oz of $0.10 net of by-product credits. We remain on target to achieve our forecast production of 1.6 million pure silver ounces for 2009. Through continued increments in efficiency, throughput and head grades Fortuna now clearly ranks amongst the lowest cost silver producing companies."
Financial ResultsDuring the first quarter of 2009, the Company generated record quarterly revenue of $ 8.98 million compared to $ 6.81 million over the same period in 2008. The volume of concentrate sales during the first quarter of 2009 was 77% more than the same period in 2008. The significant increase in sales is the result of the Company's investment plan over the last two years in mine development, processing plant expansion and infrastructure. Mine operating income in the first quarter of 2009 was $ 3.41 million compared to $ 2.30 million over the same period in 2008. This improvement, in spite of significantly lower metal prices, is a consequence of an increase in throughput, head grades, recoveries, and lower operating costs. Operating income for the first quarter of 2009 was $ 0.08 million after deducting $ 0.35 million of stock-based compensation charges and $ 1.08 million of a write-off of deferred exploration costs. The operating income for our Peruvian subsidiary, operator of the Caylloma mine, was $ 2.42 million.Operating ResultsIn the first quarter of 2009, the Caylloma mine achieved significant increments in metal output with respect to both, the previous quarter and the corresponding quarter in 2008. Silver production was 384,339 ounces; 32% increase over Q4 2008 and 174% increase over Q1 2008. Lead production was 2,645 tonnes; 5% increase over the Q4 2008 and 123% increase over Q1 2008. Zinc production was 3,152 tonnes; 6% increase over Q4 of 2008 and 52% increase over Q1 2008.The Company is for the first time reporting cash cost per ounce of payable silver at Caylloma since the impact of silver in the revenue stream is 49%. The cash cost for Q1 was $0.10, net of by-products lead and zinc.Cash cost per tonne of treated ore for Q1 2009 was $44.37 compared to $49.97 for the corresponding quarter of 2008. The corresponding unit net smelter return (NSR) was $91.00 per tonne.The average throughput rate for Q1 2009 was 1,050 tpd. The expansion project for the processing plant was concluded 15 days ahead of its scheduled start-up and since mid April, the plant is processing ore at a rate of 1,200 tpd. The newly added copper circuit went into production in the last week of April and it is currently undergoing a normal tuning and balancing period. San Jose ProjectThe Company has concluded metallurgical tests for the project with Metcon Research of Tucson, Arizona and is advancing with feasibility level engineering studies for the development of the San Jose deposit. Engineering contracts were awarded in February for mine design, process plant design, tailings dam, water and power.On April 16th, the Mexican federal regulatory agency for electricity accepted the feasibility study for the energy project and granted permission to connect to the national power grid for up to 5 MW of power. The Company also submitted the "Manifiesto de Impacto Ambiental" to the Mexican environmental authorities on April 3rd. Fortuna Silver Mines Inc.Fortuna is a growth oriented, silver and base metal producer focused on mining opportunities in Latin America. Our primary assets are the Caylloma Silver Mine in southern Peru and the San Jose Silver-Gold Project in Mexico. The Company is selectively pursuing additional acquisition opportunities. For more information, please visit our website at http://www.fortunasilver.com/."

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